News in South Africa 25th March:
1. New COVID-19 countermeasures:
Government announced new measures to help small businesses, and also gazetted regulations that will allow banks to work together to allow debt holidays, and malls to help their tenants.
South Africa has a number of funds and initiatives in place to help businesses and companies – especially small businesses – during the economic crisis triggered by the novel coronavirus behind Covid-19, and the measures to contain it.
Banks have temporary debt relief plans and options, immediate tax breaks have been implemented, and systems now exist to register for help, advice, and opportunities.
Much, but not all, of the measures are aimed and small and medium-sized companies, especially those organisations involved in critical services and manufacturing from food to masks.
The initiatives and opportunities intended to help business are rapidly evolving, and details are not always immediately available.
Government has also gazetted new rules to allow banks to work together to agree on the same measures to deal with clients who face losses during the coronavirus crisis.
This will include debt repayment holidays and debt relief, as well as restrictions on the repossession of assets of those who have fallen behind on payments.
They will also be allowed to work together on new measures that will extend more credit to individuals and businesses.
Usually, under South Africa’s strict competition legislation, banks can be fined billions for colluding on any aspect of business. But given that South Africa is in a state of national disaster because of the coronavirus, normal rules no longer apply.
“The exemptions will allow South African banks to work together to devise programmes and relief measures which can help small businesses and consumers through these financial and economic challenges,” said minister of trade and industry Ebrahim Patel at a briefing on Tuesday.
2. JSE rocketed:
The JSE has rocketed by 7.5% as US politicians moved closer to a stimulus of around $2 trillion. The rand was last at R17.58/$.
3. UIF fund distribution announcement:
Details on how an expected R30 billion will be distributed to affected workers during the lockdown (via the UIF) are expected today.
4. Price gouging firms being investigated:
Eleven firms are being investigated for selling products such as face masks and hand sanitisers at inflated prices amid the Covid-19 crisis, Minister of Trade and Industry Ebrahim Patel has announced.
Patel was speaking at a media briefing in Pretoria, where a number of ministers from the country’s economic cluster outlined interventions in response to the coronavirus pandemic.
This comes in the wake of President Cyril Ramaphosa on Monday announcing a 21-day a nationwide lockdown – starting in the early hours of Friday morning – in an effort to slow down the spread of the virus. The number of confirmed infections in SA rose to 554 on Tuesday.
Last week government announced strict regulations to prevent businesses from hiking prices excessively for certain products – such as basic foods, personal care and hygiene products, as well as key medical supplies like surgical masks and gloves.
5. Mining companies to shut down:
Mining companies will heed the directive by President Cyril Ramaphosa to shut down their underground operations as part of the 21-day national lockdown he announced on Monday aimed at curbing the spread of the coronavirus.
In his address, Ramaphosa ordered that “companies whose operations require continuous processes such as furnaces or underground mine operations will be required to make arrangements for care and maintenance to avoid damage to their continuous operations”.
Large and small cap mining companies have indicted that they would halt operations in what is expected to severely impact the key sector, which has already been suffering as a result of commodity price volatility and a range of domestic operational challenges. Over the past few years, the local mining sector has been shedding jobs as companies close down loss-making shafts to improve capacity. Production of some key minerals, such as gold, has also plunged.
“The lockdown, as much as it is necessary, will severely hit companies. It’s possible that this phase might even lead to more restructuring processes, with more job losses,” warned independent mining analyst Mamokgethi Molopyane.
AngloGold Ashanti announced on Tuesday that it will “temporarily suspend production from its South African operations for three weeks as of midnight on 26 March 2020.”
Its operations would be placed into care and maintenance over the period.